Perhaps you are outgrowing your current house, or have been forced to relocate due to a job transfer?  Regardless of the motivation for keeping one property while purchasing another, let’s address this question with the mortgage approval in mind:

So, Do I Have To Sell?

Yes. No. Maybe. It depends.

Welcome to the wonderful world of mortgage lending. Only in this industry can one simple question elicit four answers…and all of them may be right.

If you are in a financial position where you qualify to afford both your current residence and the proposed payment on your new house, then the simple answer is No!

Qualifying based on your Debt-to-Income Ratio is one thing, but remember to budget for the additional expenses of maintaining multiple properties. Everything from mortgage payments, increased property taxes and hazard insurance to unexpected repairs should be factored into your final decision.

What If I Rent My Current Property?

This scenario presents the “maybe” and the “it depends” answers to the question.

If you’re not quite qualified to carry both mortgages, you may have to rent the other property in order to offset the mortgage payment.

In that scenario, the lender will typically only count 75% of the monthly rent you are proposing to receive.

So if you are going to receive $1000 a month in rent and your current payment is $1500, the lender is going to factor in an additional $750 of monthly liabilities in your overall Debt-to-Income Ratios.

Another detail that can present a huge hurdle is the reserve requirement and equity ratio most lenders have. In some cases, if you are going to rent out your current home, you will need to have at least 25% equity in order to offset your payment with the proposed rent you will receive.

Without that hefty amount of equity, you will have to qualify to afford BOTH mortgage payments. You will also need some significant cash in the bank.

Generally, lenders will require six months reserve on the old property, as well as six month reserves on the new property.

For example, if you have a $1500 payment on your old house and are buying a home with a $2000 monthly payment, you will need over $21,000 in the bank.

Keep in mind, this reserve requirement is incremental to your down payment on the new property.

What If I Can’t Qualify Based On Both Mortgage Payments?

This answer is pretty straightforward, and doesn’t require a financial calculator to figure out.

If you are in this situation, then you will have to sell your current home before buying a new one.

If you aren’t sure of the value of the home or how your local market is performing, give us a ring and we’ll happily refer you to a great real estate agent that is in tune with property values in your neighborhood.

…..

As you can tell, purchasing one home while living in another can be a very complicated transaction.  Please feel free to contact us anytime so we can review your specific situation and suggest the proper action plan.

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Related Articles – Mortgage Approval Process:

• Basic Mortgage Terms
• How Much Can I Afford?
• Common Documents Required For A Mortgage Pre-Approval
• Top 8 Questions To Ask Your Lender During Application Process
• What’s The Difference Between An Investment Property, Second Home and Primary Residence?
• Seven Items Real Estate Agents Need To Know About Your Mortgage Approval

New regulation, updated disclosures, appraisal guidelines, mortgage rate pricing premiums, credit score, secondary approval layering, rescission deadlines, property type, HOA insurance requirements, title and property flip rules are just a few of the daily changes that can have a serious impact on a borrower’s home loan financing.

With today’s volatile lending environment, it’s obviously important for home buyers to get a full loan approval from your Georgia mortgage lender which clearly defines all contingencies that pertain to each unique home buyer’s scenario prior to spending any time looking at new homes with an agent.

Either way, we’ve listed a few of the top things your agent should keep in mind while showing you new properties:

Caution – Agents Beware:

Property Type –

High-Rise, Condo, Town House, Single Family Residence, Dome Home or Shoe House… all have specific lending guidelines that can influence down payment, credit score and mortgage insurance requirements.

Residence Type –

Need to sell one home before moving into another? Is a property considered a second home if it’s in the same city?  What if I’m buying a home for my children to live in, it is still considered an investment property?

These are just a few of several possible residence related questions that should be addressed by your agent and loan officer at the initial loan application.

Rates / Locks –

Mortgage Rates are typically locked for a 30 day period, and one of the only ways to get a new rate is to switch Georgia mortgage lenders.  Rates also have certain adjustments for property / residence type, credit score and down payment which could have a big impact on monthly payments and therefore approvals.

A 1% increase in rate could literally mean the difference between an approval or denial.

Headline News / Employment –

Underwriters watch the news as well.  Borrowers who work in a volatile industry during hard economic times may have to jump through a few extra hoops to prove that their employment and income is secure.

Job changes, periods of unemployment or property location in relation to the subject property are other things to consider that may cause a speed bump in the approval process.

Title / Property Flip –

A Flip is considered a property that has been purchased by an investor and quickly sold to a new buyer within a 30-90 day period.  Generally, an investor will do a little rehab work, fresh paint, landscaping…. and try to re-sell the property for a significant profit margin.

While it seems like a perfectly fair transaction, many lenders have strict guidelines in place that prevent borrowers from obtaining financing on properties that have a previous owner with less than 90 days of documented ownership.

These rules change frequently, and are specific to particular property types, so make sure your agent is aware of all the boundaries associated with your approval letter.

Homeowner’s Association Insurance –

Some lenders require Condos and Town House communities to have sufficient insurance and reserves coverage pertaining to specific ratios on units that are owner occupied vs rented.

It may also take a few weeks and cost up to $300 to receive an HOA Certification, so make sure your Due-Diligence period is set accordingly in the purchase contract.

Appraisal Ordering Procedures –

Appraisal ordering guidelines are changing quite frequently as regulators implement many new consumer protection laws created to prevent future foreclosure epidemics.

Unfortunately, some of the new appraisal regulations have proven to slow the home buying process down, as well as confuse lenders about the true estimate of neighborhood values.

VA, FHA and Conventional loan programs all have separate appraisal ordering policies, so make sure your agent is aware of which loan you’re approved for so that they document any anticipated delays in the purchase contract.

For example, if an appraisal takes three weeks and the average time for an approval is two weeks, then it probably isn’t smart to write a purchase contract with a four week close of escrow.

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If this isn’t possible, then it’s critical not to let negative cash flow go on for too long. Instead, quickly seek references for a reputable bankruptcy attorney and a credit counselor. One of the worst mistakes consumers make is to borrow more money in an attempt to pay off debts.

When declaring bankruptcy, it is important to be very accurate and honest in one’s filing, especially when it comes to any recent changes in income. Remember, a bankruptcy hearing is a federal proceeding, complete with courts, judges, and representatives who coordinate with the Department of Justice, the FBI, and the IRS.

During the proceeding, homeowners should develop a budget and try to live below their means. They should use this time to save cash as well as examine the causes of their bankruptcy. Also, they should keep organized, saving all their paperwork and taking note of their discharge date. Having this information on hand will prove extremely useful in the future.

Once the bankruptcy is final, it’s time to begin rebuilding credit. Secured credit cards are an excellent place to start. This is also a good time to hire a reputable credit repair specialist who can offer advice regarding the best ways to re-establish credit. There is definitely life (and credit) after bankruptcy. The trick is to get the help and advice you need from professionals you trust. Contact us for a referral to a professional bankruptcy attorney.

If you enjoyed this post, why not connect with me elsewhere?

If you’re looking for a mortgage in the Atlanta area, you can visit my primary Peachtree City and Newnan mortgage lender website at www.wdarrellwalters.com. If you’re interested in Free Business Boosters for Real Estate, visit www.freebusinessboosters.com. Thanks!

Urban legends have been a part of popular culture for years. We’ve all heard suspicious stories that supposedly happened to a “friend of a friend” but which couldn’t be verified. Remember the story about Mikey, the Life® cereal spokes child, whose stomach allegedly exploded from mixing Pop Rocks and soda?*

The Internet has added a new twist to the urban legend phenomenon by making these stories easy to spread to a large audience over a short amount of time. What’s worse, these stories are often distributed in the form of a plea for help from an unfortunate victim who could be saved if you just contributed a few dollars.

After the tsunami disaster, several fraudulent emails were circulated, some of which contained links to phony charity websites. The same problem occurred after September 11th. Whether it’s a plea for money, an email containing false links, or a virus alert that isn’t true, these scams have made it difficult to trust anything you hear via email. Here are some resources that can assist you with discerning what’s real and what’s not!

Emails - The next time you receive a dire virus warning or a chain email promising great wealth, visithttp://hoaxbusters.org. This website contains information about over a dozen different categories of hoaxes, ranging from virus warnings to scam chains. If you receive an email that looks suspect, chances are this site will have a listing about it.

Charity Websites - If you are unsure about whether to give to a particular charity, visit www.charitynavigator.org. This website examines over 4,300 charities and evaluates how well they are using your donations. It also contains tips to assist you in choosing where to give and how to document your donations for tax purposes. Once you’ve selected your charities, you can usually make your contributions online. Just be sure to visit the organization’s official website, rather than using a link in an email. This will ensure that your contribution is going where it should rather than into a scammer’s pocket.

Urban Legends - Is there an urban legend that you’ve been wondering about for years? Visit www.snopes.com and find out once and for all if it’s true. They have urban legends categorized by subject matter and even provide a bibliography at the end of their listings to reflect their research! The Discovery Channel is also exploring urban legends through their television show, MythBusters. To learn more about the show and the myths they have pursued, visit the Discovery Channel website at www.dsc.discovery.com and click on MythBusters.

*Mikey was played by an actor named John Gilchrist. He is alive and well and is currently working as an advertising executive!

Do you have a favorite Internet resource that you’d like to share? Please call me and tell me all about it!

If you enjoyed this post, why not connect with me elsewhere?

If you’re looking for a mortgage in the Atlanta area, you can visit my primary Peachtree City and Newnan mortgage lender website at www.wdarrellwalters.com. If you’re interested in Free Business Boosters for Real Estate, visit www.freebusinessboosters.com. Thanks!

This flexibility works well for consumers who have seasonal income or want more control over their cash flow.However, the borrower must have some degree of financial discipline. Each month, the borrower will choose to make a fully amortized payment, an interest-only payment, or a low introductory rate payment.

A fully amortized payment is larger, and includes payment toward principal + interest. The interest-only payment is lower, but no part of that mortgage payment goes toward the principal. Borrowers are simply keeping their head above water.

The third option is where negative amortization comes into play. If the consumer chooses to make the low introductory rate payment, the interest is not sufficiently covered for that month. The balance of interest owed is then tacked back on to the principal, thus increasing the mortgage debt.

Smart consumers can use these payment options to their advantage, but should have a full understanding of how adjustable loans work. They should also know that once the maximum loan amount has been reached, the lender will immediately increase the payment amount to the fully amortized rate.

If you enjoyed this post, why not connect with me elsewhere?

If you’re looking for a mortgage in the Atlanta area, you can visit my primary Peachtree City and Newnan mortgage lender website at www.wdarrellwalters.com. If you’re interested in Free Business Boosters for Real Estate, visit www.freebusinessboosters.com. Thanks!

Does this scenario sound familiar? Your latest credit card statement comes in the mail, and there’s an error. You know that it needs to be dealt with, but for some reason you keep putting it off. Then it hits you. The reason for your procrastination is that you just cannot bear the thought of calling “customer service”. Just the idea of facing a telephone maze of pressing buttons and repeating personal information over and over again is so daunting, so loathsome, you actually consider just paying the charge.

The good news is your days of wallowing through the Dante’s Inferno of customer service phone systems are over. Thanks to a computer programmer/blogger named Paul English, you can now talk to a real human being in a fraction of the time. You see, Paul and his Internet friends have taken the time to compile a list of some major companies along with shortcuts you can use to reach an operator on their systems. Here are some examples:

America Online® – Press 0 at each prompt

Bank of America – Press 0 at each prompt

Citibank – Press 0# 0# 0# 0# 0# 0#

e*Trade – Press # # # #

FedEx® – Say “agent” immediately, then “no.”

MasterCard® – Press 000 at each prompt

To see Paul’s entire list of company phone numbers and instructions, simply log on to www.gethuman.com and click on the “Customer Service ” link. You may even want to create a bookmark to the website on your computer both at home and at work.

Mr. English is completely dedicated to the customer service cause. Along with publishing this potentially time-saving information, Paul provides the ability to rate a company’s customer service and allows anyone with information about bypassing customer service phone menus to contribute what they know.

Companies are constantly changing their phone systems, so Paul’s list is always in flux. Lucky for us, the most current information is only an Internet connection away.

If you know of any helpful or time-saving websites, please call me. I would love to hear about them!

If you enjoyed this post, why not connect with me elsewhere?

If you’re looking for a mortgage in the Atlanta area, you can visit my primary Peachtree City and Newnan mortgage lender website at www.wdarrellwalters.com. If you’re interested in Free Business Boosters for Real Estate, visit www.freebusinessboosters.com. Thanks!

Even as consumers try to unload credit-card debt – and card issuers try to unload high-risk borrowers – some banks are still trying to get teenagers hooked on plastic.

“Call it plastic on training wheels!” chirps the press release for the new Current Card by Discover, the latest debit card aimed at “kids, tweens and teens.” I’ve never been a fan of these cards, and I like them even less given the current economic climate.

The idea is that parents deposit money in the card account, which the kids can use to buy stuff or make withdrawals from ATMs. The cards tout selling points designed to appeal to parents. “Unlike cash,” says the press release, “the Current Card gives teens a better way to track and manage their spending while developing smart money-management skills.”

In addition, parents can monitor spending online or via e-mail, set spending limits and block certain merchant categories. Sorry, but I’m not convinced. Here’s why.

Debit cards encourage kids to spend. Despite their lofty goal of teaching young people to manage money, they really make it easier for kids to spend it. With the Current Card, for example, teens are eligible for “members-only” in-store coupons and online discounts when they use their cards at select restaurants, movie theaters and other “teen-friendly merchants.”

To kids, plastic is plastic. These cards aren’t credit cards, but young people don’t draw a distinction. To them, any plastic is magic money that’s meant to be topped up by Mom and Dad when it runs out.

Parental controls are overrated. Letting children make choices about how to spend their own money is a good thing. But parents don’t need to know whether the kids choose to eat at McDonald’s or buy a pair of jeans. You certainly don’t want them to buy things that are inappropriate or illegal. But if you’re worried they’ll spend money on Internet porn, they shouldn’t have a card in the first place.

The fees are high. The Current Card levies a monthly charge of $5, or $50 a year. That’s a lot to pay to track your kids’ allowance when as adults you can get a checking account for free or a credit card with no annual fee.

I have always recommended that kids be given a cash allowance, and that goes double now that cash is cool again. There’s nothing more real to a kid (or an adult, for that matter) than paying with hard currency and taking a direct hit to the wallet.

If you really want your teens to enjoy some of the convenience of plastic, you can always arrange for them to have an ATM card with access to a bank savings account, depositing paychecks and making withdrawals when cash is needed.

Reprinted with permission. All Contents © 2009 The Kiplinger Washington Editors

If you enjoyed this post, why not connect with me elsewhere?

If you’re looking for a mortgage in the Atlanta area, you can visit my primary Peachtree City and Newnan mortgage lender website at www.wdarrellwalters.com. If you’re interested in Free Business Boosters for Real Estate, visit www.freebusinessboosters.com. Thanks!

This ultimately saves the borrower thousands of dollars in interest rate fees. However, bear in mind that bi-weekly programs usually have some type of setup, transaction, and maintenance fees associated with them. A custodian manages the bi-weekly payments in a trust account (and also makes a profit on the interest accrued there). Because the lender really doesn’t accept partial payments, this middle man is still making monthly payments to the lender on some type of pre-payment schedule.

It is important for the consumer to know that the same results can be achieved without hiring an outside company to do this. As long as your loan program carries no pre-payment penalty, pre-payments can be made on a monthly or annual basis to shorten the loan term to save money on interest or remove PMI charges on loans that have less than a 20% down payment. The borrower simply needs to indicate the extra payment is being made toward the principal balance, and have the discipline to make these extra payments as scheduled.

If you enjoyed this post, why not connect with me elsewhere?

If you’re looking for a mortgage in the Atlanta area, you can visit my primary Peachtree City and Newnan mortgage lender website at www.wdarrellwalters.com. If you’re interested in Free Business Boosters for Real Estate, visit www.freebusinessboosters.com. Thanks!

1) Define Intervention – You can use Google™ as a dictionary. To have Google™ define a word, simply type in the Define: operator followed by the word you want to look up. Example: define: intervention. You can also use Google™ to find synonyms by using the tilde symbol before a word. Example: ~money.

2) Another Plus – You can use Google™ as a calculator. Simply enter your problem. Examples:  12 *3= or 6*10+(sqrt 10)^3=. You can also convert many units of measure simply by entering the terms:10.5 cm in inches.

3) Take Stock – Google™ provides current market data for stocks and funds. Just type in the ticker symbol. Example:GOOG. You can also convert currencies to see how much money you just made. Example: 150 GBP in USD.

4) Rain or Shine? – Who needs a weatherman? Just type the word weather followed by the city and state, U.S. zip code, or city and country. Example: weather Paris or weather 90210 or weather Australia.

5) What’s the Score? – Check scores and schedules of your favorite NBA, NFL, NHL, and MLB teams on Google™. Simply type in the team name or league for specific results.

6) Private Caller ID – Want to know who’s calling you? Type in the area code and number and find out. If you want to know the location of a specific area code, just type in the US area code.

7) eCard Catalogue – For Google™ book results, simply type in an author’s name or the book you’re looking for.

8) Did You Feel That? – Did we just have an earthquake? For information about recent earthquakes, type in earthquake followed by the city and state or U.S. zip code.

9) What’s in a Name? – Whether it’s a long-lost friend or someone you just met, type in a person’s name in quotation marks to find out any information available online about the person. Example: “Albert Einstein”.

10) Special Delivery? – If you’re tracking a package from UPS, FedEx or USPS, simply type in your tracking number to find out the status.

11) Pick Me Up at the Airport – Was your friend or family member’s plane delayed? You can find out by typing in the name of the airline and the flight number into the search box. You can also see delays at airports by typing in the three-letter airport code followed by the word airport.

12) Get Some Direction – Need a map or directions? Type in the name or U.S. zip code of a location and the word map for specific results. Click on the Google™ Map for further options, like driving directions.

If you enjoyed this post, why not connect with me elsewhere?

If you’re looking for a mortgage in the Atlanta area, you can visit my primary Peachtree City and Newnan mortgage lender website at www.wdarrellwalters.com. If you’re interested in Free Business Boosters for Real Estate, visit www.freebusinessboosters.com. Thanks!

Exact Word or Phrase – Let’s say you turn to Google™ to find out who said this exact quote, “Great poetry requires great audiences.” If you type in the entire phrase, Google™ will return with more than 10 million responses. But if you put the same phrase within quote marks, Google™ returns 4 responses, and you see that Walt Whitman was credited with this quote according to the search results. You can also use the + symbol for finding exact words.

Searching Within a Site – Have you ever gone back to a site to try and find an article you read recently but can’t seem to find it again? Well, Google™ allows you to search for results within a specific website. Let’s say the website was NYtimes.com and the story was about the cost of college. All you have to do is type in college costs site:nytimes.comand you’ll only receive results from that specific site. You can combine tip one and tip number two to narrow it down even further: “college costs” site:nytimes.com for exact phrase results. You can also specify an entire class of sites to return results, such as .gov (government sites), .edu (university sites) and so on: “college costs” site:.gov.

Exclude Terms – Sometimes Google™ is too helpful and includes results for terms that you don’t want. To avoid this, simply type in your term and use the hyphen symbol immediately before a word to exclude extraneous terms. For example, let’s say you want to search the Internet for pirates. You can help limit the results with this technique: pirates –Caribbean. You can do this numerous times: pirates –Caribbean –Pittsburgh –movie –baseball. You can even combine tip number two and exclude an entire site: pirates –Caribbean –Pittsburgh –site:MLB.com.

Fill in the blanks or Wild Card – The * symbol on Google™ is called a Wild Card. Using it in a query in place of whole words will allow you to search for results that fill in the blanks of the missing Wild Card word. For example, let’s say you wanted to find out what bills the Governor voted on or who your favorite basketball team selected in the NBA draft. Simply type: Governor Smith voted * on or Lakers selected * in the NBA draft and Google™ will return results that fill in the blanks.

One OR the Other – Google™ considers all words in a query. But sometimes you don’t need all of the terms to find what you’re looking for. That’s when Google™’s OR operator can come in handy. By simply typing in OR (in caps) in between these terms you can limit the results and help find what you’re looking for much easier. For example, let’s say you wanted results for popular films, but only from 2004 and 2005. Simply type in: popular films 2004 OR 2005. You can combine other strategies to limit results even further: “popular films” 2004 OR 2005 or “popular films” 2004 OR 2005  –Italy  –site:TMZ.com.

Stayed Tuned for More Tips in Search Google™ Like a Pro (Part Two).

If you enjoyed this post, why not connect with me elsewhere?

If you’re looking for a mortgage in the Atlanta area, you can visit my primary Peachtree City and Newnan mortgage lender website at www.wdarrellwalters.com. If you’re interested in Free Business Boosters for Real Estate, visit www.freebusinessboosters.com. Thanks!